US Regulators Refocus CRA on Lending, Tighten Grant Scrutiny
Congress enacted the Community Reinvestment Act in 1977 to combat redlining by requiring banks to help meet credit needs across their communities, including low- and moderate-income neighborhoods, while operating safely. Regulators assess lending, investments and services under the CRA, and weak ratings can complicate branch openings and mergers. The treatment of grants to community organizations is therefore consequential for both banks and nonprofit groups.
The Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency have proposed tighter standards for community-development grants, seeking to ensure bank funds are not diverted to unrelated activities or excessive operating costs. The draft sets no fixed dollar ceiling. It would place greater weight on lending in CRA examinations while reducing the emphasis on deposit services. Public comments will be accepted for 60 days after publication in the Federal Register.
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The history behind this eventUS Regulators Move to Curb CRA Credit for Nonprofit Grants
Congress enacted the Community Reinvestment Act in 1977 to counter redlining and require regulators to assess whether banks meet the credit needs of their entire communities, including low- and moderate-income neighborhoods. CRA ratings can influence approvals for bank mergers, acquisitions and new branches, giving lenders a strong incentive to support local development through loans, investments, services and grants to nonprofit organizations.
The Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation proposed targeted CRA revisions on July 31, 2026; the Federal Reserve did not join the proposal. For banks with more than $10 billion in assets, a grant would qualify for CRA consideration only if the recipient’s indirect costs do not exceed 15% of the donation. Recipients would need written commitments, supporting records and IRS Form 990 disclosures. Comments are due 60 days after publication in the Federal Register.
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